Canadian Housing Market Report: September 2014

• National home sales fell 1.4% from August to September.
• Actual (not seasonally adjusted) activity stood 10.6% above September 2013 levels.
• The number of newly listed homes declined by 1.6% from August to September.
• The Canadian housing market remains balanced.
• The MLS® Home Price Index (HPI) rose 5.3% year-over-year in September.
• The national average sale price rose 5.9% on a year-over-year basis in September.

Bank Commentary

BMO Economics: Canada’s real estate market has become so localized that there’s little value in looking at the broader trends these days… It is well documented that the big-three (Vancouver, Calgary and Toronto) are where home price gains are concentrated. Indeed, Vancouver prices continued to accelerate in September, up 5.3% y/y (MLS HPI), while Toronto was up a strong 7.8% and Calgary a massive 10.1%, though the latter could cool with recent developments in the oil market… The good news is that the wide disparities in Canada’s housing market largely reflect economic, demographic and supply/demand fundamentals at work, all but eliminating any fears of a widespread ‘bubble’. (Read full commentary here)

TD Economics: While the housing market continues to defy expectations in 2014, we still remain of the view that housing activity will eventually cool from current levels. With home prices continuing to rise above incomes, affordability will become an obstacle to housing demand once interest rates do eventually begin to rise (Read full commentary here)

RBC Economics: Canada’s housing ‘split personality’—whereby a trio of markets (Calgary, Toronto and Vancouver) show a fair degree of heat and the majority of others are more temperate or even soft—continues to be in evidence. The relatively good news in September, however, was that resales inched lower even in ‘hot’ markets, which if sustained, would go some way into reducing the risk of overheating. Given these markets’ large share of the national total, this moderation also would alleviate concerns at the national level. (Read full commentary here)